External Factors Affecting Franchisees

When running a franchise unit, a franchisee must keep up to date with the latest news, legislation and trends, not just directly related to their industry but also their geographic location. These factors can be considered external as they aren’t directly related to their business and will most likely be something they can’t influence in terms of changing the decision, it’s something they must accept.

Van Franchisees Be Aware

With the growing trend of making the world a more environmentally friendly place the UK government, as well as many other governments across the globe are enforcing new laws and legislation to improve the environment. Such laws include the new taxes being imposed on diesel drivers as seen here – Diesel Tax. This demonstrates the beginning of a shift to move consumers from buying cars run on fossil fuels to the likes of electric cars. The UK government isn’t the only player in this new expense as individual towns are also moving to toll cars that enter their towns using diesel. This is however going to take some time before it becomes very detrimental to your franchise as the government understands that the cost to replace a fleet of diesel cars or vans would be too much for a business to do overnight.

This shift will not stop, they are focusing on diesel as it’s a bigger problem than petrol, however petrol will be next and those who do not take this trend seriously now will continue to be hit with such new laws. If you own a van based franchise or you own a franchise that requires a lot of vehicles to facilitate your business, then you should anticipate these cost in your forecast. A franchisee needs to stay abreast to any news relating to this, as next time you go out to increase your fleet, potentially the cost of an electric car will be less than the long term cost of diesel.

Technology Increasing Ease of Access for Franchisees

This factor will in someway affect every franchise market out there, either directly or indirectly through new competitors emerging using new technology. Those that will be affected the most will be home based franchises or Internet and Computer Franchises.

Technology has already made it possible for a franchisee to solely run their business without leaving their home, this has been done through applications on the internet. Such applications range in their functionality but when you can create documents, share them online or even work simultaneously on a document and communicate through skype, the possibilities are endless. This factor is a benefit for franchisees as they can complete more and more activities using nothing but a single laptop with internet access.

Ultimately technology makes your time spent more efficient and allows for easier access to information and communication, but what technology is really doing is removing barriers. These barriers are being removed now but what is important for a franchisee to consider is that this is just a selection of uses for new technology and what will be here in 5 years’ time will be considerably better. Staying abreast of the latest technology could provide you with time saving, cost reduction or improved communication methods to implement in the near future.

Sugar Tax Hitting Food Franchises

Those in the food franchise industry are likely to become under more scrutiny, with issues like increased obesity in the UK becoming rife especially among children. What the government has done to combat obesity is impose new laws to incentivise companies to produce healthy options and for consumers to purchase the healthy options. This is currently being done by the new sugar tax on sugary drinks. According to the Guardian it is expected that this latest law is only the start of the healthier consumption trend, with health campaigners already demanding it goes further to the likes of confectionary as well.

Food Franchises that offer such items need to anticipate that if they are not being hit with taxes now, they will likely in the future and need to forecast against this. They also need to speak with their franchisor around offering a healthier option as to not incur this tax. The result of this tax will lead to food franchisees either increasing prices of their products or lowering their profit margin, either way it ultimately means they will be worse off.

Labour Laws Hitting UK Franchises

Franchisees will be responsible for recruiting and paying their staff and with the governments promise to move towards a minimum wage of £9 per hour by 2020, those producing forecast need to account for this. This won’t affect all franchises as those that currently run their franchise unit by themselves don’t have to worry about pay, also those that already pay staff higher than this won’t need to change.

Cost for labour will always increase as it’s a natural trend of a healthy market, however in the UK they are also looking to introduce new laws to promote an improved work life balance. This can be seen just last year when the weekly rate of statutory maternity, paternity, adoption and shared parental pay increased to £140.98 and the weekly rate of statutory sick pay increased to £89.35. Cost like this will continue to rise and it won’t be a big surprise for most, however, franchisees may be coming from an unexperienced background and information such as this may be new to them. Staying on top of new law is essential for any business as ignoring or not being aware of such laws isn’t an excuse and it could lead you and your franchise into a lot of trouble.

We at Start Your New Franchise continue to monitor any factors that could affect franchisees and franchisors and will continue to post such information, if you wish to stay on top of any such news then we recommend that you sign up to our newsletter below.